Every Morning in a Indian House starts with a cup of tea & a news on smartphone companies like HTC, Motorola, Apple fighting the patent wars, but it seems that the Smartphone patent war has been finally arrived in India too.
Ericsson, world’s biggest telecom network equipment maker has recently filed a patent infringement suit against Micromax, one of India’s largest domestic mobile handset manufacturers .
The suit, filed at the Delhi High Court, involves a huge claim of Rs. 100 crores made by Ericsson by way of damages, which makes it so far one of the biggest cases of its kind in in terms of damages sought in a patent suit in the Indian IT and Telecommunications sector.
The dispute in itself is of considerable significance because this marks the arrival of patent wars on the Indian shores, with similar feuds between tech giants including Samsung, Apple, Google and Microsoft already going in courtrooms around the world.
This article throws a light on this dispute which embark an onset on smartphone patent wars in India.
What Ericsson Had to Say to the Court:
Ericsson is the biggest patent-holders in the mobile phone industry with over 30,000 patents and more than 100 license agreements with major companies.
Ericsson claims that this this legal action on its part was inevitable after more than three years’ negotiation with homegrown mobile manufacturer Micromax has refused to enter licence agreements over use of several of its standard essential patents (SEP) patents across wireless technology standards such as GSM, EDGE and 3G despite several attempts by the former.
The infringed product portfolio from Micromax includes the popular Ninja series phones, Funbook Talk tablet, and the Canvas 2 series smartphone.
The company has sued Micromax over patent infringement and has moved to Delhi High Court, demanding huge Rs 100 crores in damages.
Micromax in its defense
Micromax has been quick to reject all the allegations by Ericsson and made the counter-allegation that Ericsson failed to stick to global commitments on providing its industry-essential patents to handset makers under FRAND (Free Reasonable and Non-Discriminatory) terms.
Claims have also been made that Ericsson, following its exit from the handset market after termination of its legal battle with Sony, was seeking to extort unrealistic amount of licensing fees, as is evident from its ongoing battles with not only Micromax, but also other players like Samsung.
Reasonable and non-discriminatory terms (RAND), also known as fair, reasonable, and non-discriminatory terms (FRAND), are a licensing obligation that is often required by standard-setting organizations for members that participate in the standard-setting process.
Standard-setting organizations are the industry groups that set common standards for a particular industry in order to ensure compatibility and interoperability of devices manufactured by different companies.
Standard-setting organizations commonly have rules that govern the ownership of patent rights that apply to the standards they adopt. One of the most common rules is that a patent that applies to the standard must be adopted on “reasonable and non-discriminatory terms” (RAND) or on “fair, reasonable, and non-discriminatory terms” (FRAND). The two terms are generally interchangeable; FRAND seems to be preferred in Europe and RAND in the U.S.
Standard-setting organizations include this obligation in their bylaws as a means of enhancing the pro-competitive character of their industry. They are intended to prevent members from engaging in licensing abuse based on the monopolistic advantage generated as a result of having their intellectual property rights (IPR) included in the industry standards. Once an organization is offering a FRAND license they are required to offer that license to anyone, not necessarily members of the group.
Without such commitment, members could use monopoly power inherent in a standard to impose unfair, unreasonable and discriminatory licensing terms that would damage competition and inflate their own relative position.
DELHI HIGH COURT
Delhi High Court, in the form of an interim order by Justice Manmohan, has issued an order to Micromax to deposit a certain amount of money, apparently in a bid to protect Ericsson’s monetary interests while the negotiations are continuing.
The deposit prescribed consists of category-specific royalties, such as 1.25% of the sale price for phones/devices capable of GSM, 1.75% of sale price for phones/devices capable of GPRS + GSM, 2% of sale price for phones/devices capable of EDGE + GPRS + GSM and for WCDMA/HSPA